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Financial Management for Elected Officials January 2013 <br /> <br />Institute for Local Government www.ca-ilg.org 13 <br /> <br /> <br /> <br />• Are there adverse patterns? <br /> <br />• Does staff have a plan to address problem areas? <br /> <br />• Are there inconsistencies or conflicting trends? <br /> <br />• Do the reports identify areas of uncertainty or risk in any forecasts contained in the reports? <br /> <br />• Do the reports frequently contain surprises (unexpected developments)? <br /> <br />Annual Reporting <br /> <br />• Are the annual financial reports prepared by a certified public accountant, in accordance with <br />generally accepted accounting principles? Are these reports audited by an outside or <br />independent auditor? <br /> <br />• Have all the required disclosures, for example, those required by the Governmental <br />Accounting Standards Board (GASB—sometimes pronounced “gaz-bee”) been made? <br /> <br />• How long has the outside or independent auditor been auditing the agency? Does the agency <br />periodically change auditors every few years to provide a fresh view of the agency’s financial <br />practices and reports? <br /> <br />• What is the relationship between the auditor and both the agency staff and the governing <br />body? Is the auditor getting the information he or she needs in a timely manner? Is <br />communication open and encouraged? <br /> <br />• Are the audited annual financial reports timely—within six months after year-end? <br /> <br />• Should the agency have an audit committee to select and supervise the work of the outside or <br />independent auditor?21 <br /> <br />• Are the auditors' opinions “unqualified?” (An “unqualified” opinion means that the auditor <br />concludes the agency followed all accounting rules and that its financial reports present an <br />accurate picture of the agency's financial condition. A qualified opinion is a significant <br />warning sign that demands attention from the governing body.) <br /> <br />• Does the auditor prepare a transmittal letter that clearly and concisely describes the agency's fiscal status? <br /> <br />• Does the auditor issue a letter to the governing body reporting on the agency’ internal controls? <br /> <br />• Does the agency follow the “Award for Excellence in Financial Reporting” guidelines of the Government Finance Officers Association?22 If not, why not? <br />Page 63 of 109